Saturday, October 11, 2014

Nielsen Admits Reporting Inaccurate Broadcast Network Ratings

Nielsen acknowledged on Friday that it had been reporting inaccurate ratings for the broadcast networks for the last seven months, a mistake that raises questions about the company’s increasingly criticized system for measuring TV audiences.

The error wound up benefiting one network, ABC, while negatively affecting the others, according to people briefed on the problem. In a telephone call with reporters, Nielsen executives would not confirm that it had resulted in added viewers for ABC, saying they could not discuss individual clients.

An ABC executive confirmed that the error had improved the network's ratings. As for Nielsen, its executives played down the discrepancy in viewing totals, saying they fell between 0.1 percent and 0.25 percent of the viewing totals.

But it remained unclear how the mistake would affect the billions of advertising dollars based on Nielsen's ratings, as well as the company’s reputation. And several television and advertising executives expressed degrees of anger and incredulity at both the incorrect ratings and the amount of time — seven months — it had taken to discover the problem.

“These ratings are the currency of the business,” said Alan Wurtzel, who heads research at NBC. “Any time that currency is under suspicion it’s a concern.”

Nielsen has long reigned as the main source that the entertainment industry uses to measure TV audiences, and its ratings are the currency on which nearly $70 billion in advertising dollars are traded each year in the United States.

The company has come under increased pressure in recent years as television and advertising executives have called its methodology antiquated and questioned its ability to measure the ways people watch television today, whether on a traditional TV set in the living room or on a mobile phone on the fly. A range of outsiders, including Rentrak and comScore, are challenging Nielsen’s dominance by introducing methods to track TV viewing in the digital age.

Brian Wieser, a media analyst with Pivotal Research, said Nielsen was struggling on multiple fronts. “You’ve got a ‘death of TV’ fear in general, you have the Rentrak competitiveness issue, and you have the quality and integrity of the data issue,” Mr. Wieser said.

“Any one of those three things could come up at any time,” he added, “but for those to hit you all at the same time, wow.”

Network shows are judged by small fractions of ratings points and perceptions of a show’s success or failure are often determined by whether the show gained or lost as little as a tenth of a point. In one example that will surely be raised, ABC News made headlines this last week by surpassing NBC News’s evening broadcast for the first time in six years. NBC will undoubtedly question those results now, especially because it has noted for months that ABC began closing the ratings gap in April — or one month after the pro-ABC error affected Nielsen’s system.

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Even if the ABC gains were entirely legitimate, they now have a shadow over them. ABC issued a statement on Friday saying that despite the error, the network was confident that it would maintain the ratings momentum that its programming has seen in the opening weeks of the new television season.

The Nielsen executives Pat McDonough and Steve Hasker said repeatedly in their news conference on Friday that the incorrect ratings — which had affected every program on ABC, not just the ones in prime time — fell “well within the tolerance of statistical error.” They said any changes in numbers or the rankings of programs would be largely insignificant and would be corrected when Nielsen issues new ratings on Monday.